Seattle Trademark Lawyer

Trademark dilution is a creature of statute.

As incorporated in the federal Lanham Act, it prohibits a later-adopter from using a trademark that is likely to dilute the earlier-adopter’s famous trademark. It doesn’t matter if the later use is likely to cause confusion — the standard for trademark infringement. What matters is the probability of whether the famous mark’s power to distinguish its owner’s goods and services from those of others has been “diluted,” or whittled away. This is called dilution by “blurring.” The statute also prohibits another form of dilution — a likelihood of dilution by “tarnishment,” or a lessening of the brand’s good reputation.

Because trademark dilution doesn’t require an owner to show likelihood of confusion — and, therefore, provides super-trademark rights — the federal statute limits such protection to the owners of truly “famous” trademarks, which the statute defines as trademarks that are widely known on a nationwide basis. In other words, the dilution cause of action is only available to the owners of household names.

STARBUCKS is clearly one such name. Therefore, Starbucks Corp. was able to avail itself of the dilution cause of action against coffee roaster Wolfe’s Borough Coffee, Inc., d/b/a Black Bear Micro Roastery, which had named some of its coffee CHARBUCKS BLEND and MISTER CHARBUCKS. Starbucks argued the roaster’s doing so was intended to and did call to mind Starbucks’ famous STARBUCKS brand, so Starbucks was entitled to an injunction stopping such use.

After much wrangling, Starbucks appears to have finally lost. The case went up and down to the Second Circuit several times, and in the middle of the litigation, the statute was re-written. But in the end, the Second Circuit found that despite having super-trademark rights, Starbucks did not prove the roaster’s marks were likely to dilute the famous STARBUCKS brand.

In making that decision, the Second Circuit weighed the factors set forth in the statute. It found the district court was not wrong when it concluded the parties’ marks were not very similar. It also found the district court was not wrong to conclude that Starbucks’ consumer survey was flawed because it did not reflect how the parties’ marks were used in the marketplace. Therefore, it found the survey “only minimally” proved that consumers actually associated the roasters’ marks with STARBUCKS.

The court found three of the statutory factors — distinctiveness, recognition, and exclusivity — favored Starbucks, but “the more important factors in the context of this case are the similarity of the marks and actual association.” 

This led the Second Circuit to conclude: “Ultimately what tips the balance in this case is that Starbucks bore the burden of showing that it was entitled to injunctive relief on this record. Because Starbucks’ principal evidence of association, the Mitofsky survey, was fundamentally flawed, and because there was minimal similarity between the marks at issue, we agree with the District Court that Starbucks failed to show that Black Bear’s use of its Charbucks Marks in commerce is likely to dilute the Starbucks Marks.”

This goes to show that while potentially powerful — really powerful — the federal dilution statute does have its limits.

Everett’s Absolut Hair Salon & Makeup is changing its name.

It’s doing so in response to a cease-and-desist letter it received from Absolut Company Aktiebolag, the company that owns the ABSOLUT brand in connection with vodka.

That’s a big disruption to a small business. The salon says it will cost $20k to effect the change.

There are a few lessons here. First, it’s important to search for conflicting trademarks before adopting and investing in a new brand.

Second, in clearing a trademark for possible use, businesses are right to avoid adopting a mark that would likely cause confusion with a prior use. But they shouldn’t overlook trademark dilution, which at the federal level and in some states (including Washington), protects against the use of a famous trademark in a way that would lessen the capacity of the famous mark to point back exclusively to the famous trademark owner. Here, Absolut (the vodka company) is saying that Absolut (the hair salon) is doing just that — diluting the vodka company’s brand. In other words, even if consumers probably wouldn’t think the vodka company is running a hair salon, consumers that see the hair salon’s trademark are likely to start thinking of both the hair salon and the vodka company, rather than just the vodka company. At least that’s what the vodka company is arguing. In this way, dilution statutes give famous brand owners super-trademark rights.

Third, one can see the power of being big. Even if the salon is right — and that it hasn’t done anything wrong — it may not be able to afford to litigate in court for the next year or so in order to prove its case. Or even if it could afford to fight, the cost of the litigation may outstrip the value of being able to keep its name. The big vodka company, on the other hand, can leverage its size to force a change. When not justified, this is known as trademark bullying. It’s a power dynamic smaller companies should consider.

To state the obvious, it’s far better to avoid a potential trademark dispute before adopting a mark than having to make an abrupt change after years of investment. Search first, adopt later, and avoid trademark pitfalls that can disrupt your business.

Coca-Cola or Chica-Locca?

A STL first: a reader’s infringement safari!

Seattle lawyer Kevin Halverson just returned from an enviable vacation to Mexico. “Warm-water surfing,” as he put it. Seriously, that right there is reason enough to practice law. I’m super-jealous.

But onto the infringement. The famous Coca-Cola logo morphs into “Chica-Locca” on trucks, t-shirts, and signs in Sayulita advertising the Chica Locca Magical Tour company’s boat tours, he says.

So what’s wrong with Chica Locca’s having a little fun with the Coca-Cola logo? No one really thinks they have something to do with Coca-Cola, right?

Probably not, but its use still amounts to trademark dilution. Under the Lanham Act (and many state statutes), dilution occurs when a famous trademark is used by a third party without the famous brand owner’s permission. The problem is not with a likelihood of confusion, but with watering down the famous brand. While consumers seeing the Coca-Cola logo used to think only of cola made by the Coca-Cola Company, consumers that have visited Sayulita now think of both the Coca-Cola Company and the Chica Locca Company. It’s an eroding of the power of Coca-Cola’s famous mark solely to stand for the company that makes Coke. It’s also an unfair free ride that Chica Locca has taken on the Coca-Cola Company’s fame.

But not to get too heavy. It’s a great find for a lawyer on vacation.

Following is a guest post from my former student and recent UWSL LL.M. graduate, Aman Gebru, on the evolving theory of contributory trademark dilution, a claim he notes recently got traction in a local case. This post is adapted from his seminar paper entitled: “The Claim of Contributory Dilution under the Trademark Dilution Revision Act.” In the fall, Mr. Gebru will continue his legal studies at the University of Toronto, where he will pursue the equivalent of a Ph.D.

Praise and criticism for claim of contributory dilution:

“[It is] the most pernicious concept ever to come out of trademark theory.” -Mark A. Lemley, The Modern Lanham Act and The Death of Common Sense.

“[S]ome form of imputed liability for dilution is no more ‘pernicious’ than dilution itself” -John T. Cross, Claim for Contributory and Vicarious Liability for Trademark Dilution.

 “While there is no authority directly on point, there would seem to be no logical reason why the doctrine of contributory infringement should not apply to a claim under the federal anti-dilution law.” -J. Thomas McCarthy, McCarthy on Trademarks.

“It would be inconsistent with the Trademark Dilution Act to prohibit a cause of action for contributory dilution.” -Hon. Ricardo Martinez, Microsoft v. Shah, No. 10-653 (W.D. Wash. Jan. 12, 2011).

Imagine that Napple, a famous electronics producer, has succeeded in giving consumers a “high-social-class” impression through its smart-phone and laptop products. Simply put, consumers feel classy when they purchase Napple’s products. Marketers have identified this method of marketing is what drives the high demand for Napple’s products. MicroGoogle, Napple’s arch-rival, wants to destroy the advantages its competitor has gained through this strategy. MicroGoogle’s CEO consults her lawyers, who say if MicroGoogle uses Napple’s trademark in a confusing way or directly dilutes it, they would be liable. Therefore, MicroGoogle’s CEO decides to use Napple’s trademarks in a way that reduces its high-class impression. The strategy works, and a sharp decline is noticeable in Napple’s sales shortly thereafter. Within weeks, MicroGoogle decides to go for the kill shot, and pays the influential “Rapper Snapper,” to use offensive slang in reference to people using Napple’s products in his music. Napple, furious about the issue, decides to bring a suit against MicroGoogle.   

Does Napple have a valid claim for contributory dilution against MicroGoogle?

The cause of action for dilution is unique in trademark law. Traditionally, protection was limited to guard against the confusing use of a distinctive mark, in an effort to protect consumers. Under dilution principles, there is no requirement to show confusion. In dilution, the plaintiff is saying “I have invested so much in promoting my famous mark, and its distinctiveness is being ‘blurred,’ or its wholesomeness is being ‘tarnished,’ by the defendant.”

Although the dilution has become widely accepted, the claim of contributory dilution has had a different fate. Most courts faced with the claim failed to give direction as to whether a valid claim for contributory dilution exists. While Congress had the chance to clarify the confusion when it enacted the Trademark Dilution Revision Act of 2006, it actually added to the confusion when it excluded the contribution to a “fair use dilution” from liability and kept silent about the contribution to “non-fair-use” dilution. The confusion has not been clarified for some time.

That is, until the Western District recognized what some have called a “novel cause of action” and denied a motion to dismiss the claim in July 2012 in Microsoft v. Shah. While earlier courts struggled with the notion that such a cause of action should be recognized, Judge Ricardo Martinez held: “It would be inconsistent with the Trademark Dilution Act to prohibit a cause of action for contributory dilution.”  Since most of the decisions regarding the cause of action have been made by trial courts, however, it is still not clear if a valid claim for contributory dilution will exist on a broader scale. The issue becomes more interesting when one considers the enormous amount of investment required to create a famous, wholesome, and highly distinctive mark. The recent debate and lobbying regarding proposed SOPA/PIPA legislation may also put pressure on the issue of contributory liability for dilution online. 

My paper (accessible here) discusses case law regarding contributory dilution from various circuits and analyzes the direction courts seem to be heading. I argue that even if the status of the claim is not yet clear, courts should give broader recognition to the claim and use existing jurisprudence to provide for its elements — similar to the accepted cause of action for contributory trademark infringement.

Thank you, Aman!

N.B. Readers may remember the Shah decision from STL’s post here.

Fair or unfair? That is the question.
Screen shots from Land Rover’s and British Northwest Rover’s Web sites

Plaintiff Land Rover is the well-known luxury-utility vehicle manufacturer from England.

Defendant British Northwest Rover, Ltd., is an Olympia, Wash.-based company that provides restoration and maintenance services of Land Rover vehicles.

On Aug. 1, Land Rover sued British Northwest Rover in the Western District of Washington, claiming that the defendant’s use of “Rover” in its name — and “Land-Rover” in its alleged former name, “British Northwest Land-Rover Co.” — constitutes trademark infringement and trademark dilution.

Will defendant’s alleged use of plaintiff’s trademarks turn out to be nominative fair use that simply communicates the type of vehicle that it restores and repairs? Or does its alleged use go too far, creating a likelihood of misleading the public into believing that it has some sort of affiliation with or permission from Land Rover, such as offering services that Land Rover endorses or authorizes?

The answer to those questions probably will dictate how the case turns out.

Defendant has not yet answered plaintiff’s complaint.

The case cite is Land Rover v. British Northwest Rover, Ltd., No. 12-5682 (W.D. Wash.).